The economic history of the United States over the last 60 years – our rise to the wealthiest and most powerful economy in recorded history and long, slow lurch into insolvency and economic balkanization among the population – is a direct result of the Boeing B-29 Superfortress.
Allow me to explain.
Not pictured: subprime lending
In the conduct of the Second World War, technological advances in aircraft allowed air forces to develop the techniques of strategic bombing. For most of the War, the Allies' ability to turn Axis nations into powder and rubble was constrained by the range and capacity of the existing bomber aircraft (primarily the B-17 and the British Lancaster). In other words, in 1943 it took an unreasonable number of aircraft, each with a small bomb load, to reach Germany and drop a worthwhile number of bombs on a target. In the Pacific, well, our bombers simply didn't have the range to reach Japan at all. When the B-29 came along, everything changed. With tremendous range and payload it could travel exceptional distances and, more importantly, rain a fuckload of large explosives on German and Japanese soil. We're not talking about the modern laser guided bomb that can be fired down a chimney. This is pre-computer era heavy bombing – if you want to drop a bomb on an oil refinery you drop 700 bombs and figure one will hit it.
It's incorrect to say that the B-29 won or turned the tide of the War. It didn't. But it brought the War to a more rapid end…and it did that by turning Germany and Japan, civilian and military targets alike, into smoking piles of gravel. We bombed the living shit out of them as fast as we could build B-29s and bomb casings. Eventually, as the military term goes, we "broke the enemy's will to fight." Daily firebomb raids on Tokyo will do that. Now consider the fact that the German military had already done unspeakable damage to the Soviet Union, Britain, Poland, Greece, Eastern Europe, and France earlier in the War. After we sent Germany and Japan back to the Stone Age, consider the economic standing of the United States at the end of 1945.
There was one industrialized nation in the world that was not in ruins, and we were it. Throughout the War our enormous production capacity and economy were able to arm the world – Britain, Soviet Union, France, Poland, and ourselves. Then we pulled a neat trick; after we had used that enormous capacity to help the world destroy itself, we immediately transformed our ecomony into a means of rebuilding it. Only the US had the ability and means to churn out the cars, the steel, the machinery, the resources, and everything else Japan, Britain, and continental Europe needed rebuild itself.
This is why the 1950s were our economic high water mark. People without educations could not only get manufacturing work, they could get highly-paid manufacturing work. Employers grumbled about Unions but, hey, everyone was making so goddamn much money that they forked over the salaries that made the middle class with relative good humor. The post-War generation and its prodigious number of Boomer children established a level of prosperity that working people had never before experienced. Then things got complicated.
By the late 1960s Europe and Japan had largely rebuilt. They started cranking out their own manufactured goods to compete with American ones. We could no longer name our price or our wage. We lost our position as the only functioning manufacturing economy on the planet. The unparalleled prosperity of the American middle class came to an end and employers started fighting back, cutting costs, outsourcing, and all of the other harbingers of economic doom that became prevalent in the 1970s.
Then Reagan came along and reminded Americans how much better everything had been in the 1950s, reminding the Boomers that they had earned at least the standard of living that their parents had achieved if not better. One problem – real wages were not increasing. They peaked in the early 70s and have stagnated or declined since. In order to let Americans afford the lifestyle that Reaganism was selling we had to get a little creative.
We repeatedly cut taxes, which made people feel like their earnings increased. We gave people a convenient list of scapegoats (the short version: black people) to blame for our fading prosperity. And most importantly, we began expanding credit. We emphasized consumerism as a combination of a birthright and a civic duty but we were no longer giving people the large middle class wages the WWII generation enjoyed. So we had to fudge it. If you want Joe to keep shopping while you cut his wages, you give him a Mastercard. Or, you know, four.
The 1990s brought two developments: the explicit removal of economic borders with NAFTA and the brief fantasy that the stock market was magically going to make us all millionaires. With intense competition from cheap Asian and South American goods, only the law was preventing many American manufacturers from relocating overseas. NAFTA was the final act of selling the American blue collar worker down the river. Bad turned into worse because not only were real wages falling, which had already been the case for 20 years, but the jobs disappeared altogether. By the end of the decade, at which point we realized that the NASDAQ was not in fact going to make us all rich, the smoke-and-mirrors required to delude the middle class into thinking they could afford the American Dream became overwhelming. To keep people buying homes, cars, vacations, and shopping binges they couldn't afford there remained only one solution: abandon all lending standards and start loaning money like drunken sailors.
The alternative, of course, was letting people realize and get angry about the fact that they couldn't afford a house, a car, copious consumer goods, and all those other things their folks enjoyed.
Then the financial industry had the bright idea to make investment instruments out of their bad lending decisions, theorizing that if shitty assets were packaged together they somehow became value-packed financial assets. This part and what happened next is already familiar to you. We all discovered that A) mortgage-backed securities are a bad idea since banks can make more mortgages on demand and B) a credit House of Cards only stays upright as long as debtors can minimally service their debt. When mass prosperity falls to the point at which people can't even make minimum payments, well…that's the endgame.
This isn't in my usual style; I'm too exhausted after a 48-hour interview (in Texas; rural Texas) to cite, link, and otherwise provide the kind of evidence that I think good arguments need. Nonetheless I wanted to express my dissatisfaction with the common wisdom about the important economic events in the post-War era (the Arab Oil Embargo, the end of the Cold War, supply side economics, the dot-com bubble, etc). Fuck all of that. The economic history of the past sixty years is the story of B-29, the instrument with which we flattened whatever parts of the industrialized world Imperial Japan and Nazi Germany had left standing. Subprime mortgages are no more explanatory of our current problems than that first, fateful meeting between Curtis LeMay and Robert McNamara when they looked at the B-29 and said "Hey, I know what we could do! Let's get these things in the air 24-7, and…."
Six decades later, here we are.